SR-907-000 (3)
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Santa Monica, California. September 21, 1977
(Rev. 10/19/77)
TO:
Mayor and City Council
IIA
FROM:
City Staff
OCT 2 5 1977
SUBJECT: Development of City-Owned Land at Santa Monica Airport
Introduction
This report analyzes the alternative land uses of the City-owned lands at Santa
Monica Airport, and recommends that the City Council authorize the staff to
proceed with developer selection for the development of the publicly-owned por-
tion of the property.
Background
The former McDonnell Douglas site has now been cleared and the privately-owned
portion subdivided in preparation for the development of a business park The
publicly-owned portion consists of approximately 50 acres. Of these. approxi-
['lately lO 5 acres are wIthin the City of Los Angeles and are zoned R-1.
The remaining 39.5 acres are within the City of Santa Monica zoned M-2-S,
General Industrial. Additionally, under the terms of the subdivision approval
for the private portion of the property, the City of Santa Monica has the right
to exchange two designated lots with a total of 14.5 acres for an equal amount of
land with the owners of the private portion on condition that the area be put to
open space use. The property subject to this exchange consists of Lots 1 and 11
in Tract No. 33022 (Figure 1). In evaluating land uses for the City-owned land,
certain key constraints must be recognized. These Include the following
1. The two parcels acquired by exchange cannot be used for other than recreational
open space.
2. ThelO.5 acres in Los Angeles under the present R-1 zoning cannot be used for
other than open space.
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OC1 '2 5 \977
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TO: Mayor and Council
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September 21, 1977
3. The Planning Commission and the Recreation and Parks Commission guidelines
call for use of the City-owned land in mixed recreational uses with a golf
course considered only if it does not preempt the provision of other mixed
recreational uses.
4. A combined golf course/park development of the City-owned land will require
the addition of a minimum of 14 acres to the 50-acre City-owned parcel. The
additional acres can only be obtained through a 130-foot encroachment to the
Airport property subject to FAA approval.
Alternative Development Patterns
There are two planned alternatives to the use of the City-owned land. These
include:
1. Enter into full land exchange with Barclay-Curci Investment Company; obtain
FAA approval for inclusion of an additional 14 acres of land presently used
for Airport purposes; and, develop a 50-acre golf course and a 14-acre neigh-
borhood park.
2. Enter into a partial land exchange involVing only Lot No.1 and develop a
14-acre neighborhood park and a 36-acre industrial park.
Alternative No l' Golf Course/Park Development
This alternative would require a minimum of 64 acres of land area for both an
lB-hole executive golf course and a neighborhood park. The neighborhood park
can best serve the nearby residential areas if located at the southeast corner
of 25th Street and Ocean Park Boulevard as shown in Figure 2. The National
Golf Foundation has recommended that the City make every effort possible to
obtain FAA approval to supplement the 50-acre City-owned land with 14 acres of
Airport property. The 14-acre addition to the golf course would require a
130-foot encroachment upon the Airport property and would eliminate the use of
the northern taxiway. A preliminary analysis conducted by FAA officials has
revealed no safety problems resulting from the elimination of the taxiway. Final
approval by FAA of any encroachment, however, would require a formal application
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TO: Mayor and Council
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September 21, 1977
by the City Council. In addition to the requirement for additional land, the
golf course/park alternative would necessitate land exchange with Barclay-CurcI
involving both Lots 1 and 11.
Cost and Revenues of Alternative No.1
The costs associated with this alternative would be the installatIon and
maintenance costs of the park. The Recreation and Parks Department estimates
the installation cost of the park at $35,000 per acre, and the maintenance cost
at $7,000 per acre. A 14-acre neighborhood park, therefore. will cost $490.000
to install and $98,000 to maintain annually. The development of the park can
be funded from $606,299 grant funds available to the City from the following
sources:
1976 State Bond Act $282,476
1976-7 Urban Open Space Block Grant $123.823
1977-8 Community Development Funds 5200,000
The Urban Open Space funds require 25% matching funds from the City_ To use
all of the 5123,823 Santa Monica would need to match $30,956 ~rith local money.
The golf course could be developed under a ground lease agreement with the lessee/
operator assuming the installation cost which is estimated to be 51.2-1.4 million.
Under the terms of one proposal submitted to the City staff, the lessee will
guarantee an annual minimum land rent of $60,000 the first year, increasing
thereafter $10,000 per year until a minimum rent of $100,000 is paid. In addi-
tion to the minimum annual rent, the lessee would pay 10% of gross income from
green fees and 3% on food, beverage and the pro shop. Based on an income and ex-
penditure analysis of an la-hole executive golf course at Santa Monica Airport
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TO: Mayor and Council
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September 21, 1977
prepared by the National Golf Foundation (See Appendix A). net revenues to the
City from such a golf course is estinated at $100,000 during the first year, and
could reach approximately $150,000 after five years of operation.
In summation, 64 acres of land under Alternative No.1 would generate sufficient
revenues to cover the operational cost of the public park, but no additional
revenues will be derived to the City.
Evaluation of Alternative No.1
The advantages of this alternative are:
1. The maximum provision for open space and recreational uses.
2. Achievement of maximum aesthetic and environmental benefits to surrounding
properties.
3. The provision of needed recreational facilities not presently available
within the City limits.
4. The creation of a potential land bank and the deferral of a permanent commit-
ment of the golf course portion.
The disadvantages of this alternative are:
1. The commitment of approximately 50 acres of land to a recreational use which
would return substantially less annual revenue to the City than the alternative
land use.
2. The commitment of 50 acres of land to recreational use of a limited segment
of City population--the golfing public.
3. Golf courSe development would require encroachment upon the Airport property,
would eliminate the northern taxiway, and would require prior FAA approval.
Alternative No.2: Neighborhood Park and Industrial Park Development
This alternative would require land exchange with Barclay-Curci involving
only Lot No 1. The addItion of 5 acres of City-owned land to the 9 acres in Lot
No.1 would result in a 14-acre neighborhood park at 25th Street and Ocean Park
Boulevard (See Figure 3). The balance of the City-owned land, approximately 36 acres,
could be
developed as industrial park. If for any reason the City were unable
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TO: Mayor and Council
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September 21, 1977
to obtain industrial zoning for the 10.5 acres located in the City of Los Angeles,
only 25.5 acres would be developed industrially.
Costs and Revenues of Alternative No.2
The installation and maintenance cost of the park, $490.000 and $98.000 respec-
tively. would be identical to that of Alternative No.1. The industrial park
J.
portion is expected to generate approximately $14,000 per acre" annually in lease
revenue alone. The City would receive an additional $3.000 per acre in property
taxes. The combined lease and property tax revenue to the City. therefore. would
be $17,000 per acre. If the entire 36 acres were developed industrially, the
total annual City revenue would be $612.000. If the City were unable to obtain
industrial zoning for the 10.5 acre portion of the property in Los Angeles. the
total revenue would be reduced by $178,500.
In summary, development of the 36 acres would generate $612,000 in annual revenue.
while a 25.5 acre development would provide $433.500 annually.
Evaluation of Alternative No.2
Advantages of this alternative are:
1. Provision for substantial increase in City revenues; 300 to 600 percent more
than the alternative land use.
2. Expansion of economic base of the community and provision for greater Job
opportunities.
3. Provision of expansion space not otherwise available for existing Santa
Monica industrial facilities.
The disadvantages of this alternative are:
1. Increased traffic and related environmental impacts. Industrial park will
generate more traffic than the alternative land use.
2. Loss of a rare opportunity to provide for large-scale open space and recrea-
tional uses in a fully-developed community such as Santa Monica.
*
Based on 8% yield on the market value of the raw land, estimated at 54.00 per
square foot.
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TO: Mayor and Council
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September 21, 1977
Summary
There are clearly two distinguishable alternative land uses for the publicly-
owned land at Santa Monica Airport. Alternative No.1 would result in a wide range
of recreational facilities but would not generate any income beyond what would be
necessary to maintain the park. Alternative No.2 would result in improved economic
base, expanded job opportunities and substantial revenue to the City. Both alter-
natives would be consistent with the City's General Plan, and neither would re-
suIt in any significant negative environmental impact. The selection of either
alternative, however, has policy implications which should be the prerogative of
the City Council.
Recommendation
In view of the future financial requirements of the City, the need for new revenue
sources as well as meeting park development requirements, Alternative 2 is recom-
mended for implementation.
Prepared by. James Lunsford
John Jalili
Donald T. Arnett
Stanley E. Scholl
JJ:nm
Attachments
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PLAy4laO INCOME PROJECTIONS FOR AN 18t1tLE
EXECUTIVE GOLF COURSE AT SANTA MONICA AIRPORT
Appendix A
Green Fees
Week DaYI
Average Players Per Day )00
Playing Days 250
Green Fees $).00
Income (75.000 players @).OO).............$225.000.00
~eek End & Holidays1
Average Players Per Day )25
Playing Days 115
Green Fees $4.50
Income (37.375 players @4.50)............. 168.187.50
TOTAL POTENTIAL GREEN FEE INCO~ffi $393.187.50
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Dri vine R2n~e
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','leek Day 1
150 buckets @1.50 X 250 dEyS...... ........$ 56,250.00
Week End & Holidays:
175 buckets @1.50 X 115 days.............. 30.187.50
TOTAL POTENTIAL RANGE INCO~lli
$ 86.437.50
Concessions
Golf Shop (Gress)
Food Service (Gross)
Rentals
3125.000
30,000
3,500
$158.000
Income at 8% of gross concessions.... ....... $ 12,6~o.oo
Recap For Potential Gross Income on Facility:
Green Fees........ ....... ....3393,187.50
Driving Range..... ....... .... 86.437.50
Concessions....... .... ....... 12.640.00
TOTAL POTE~TIAL FACILITY INCO~~
$492,265.00
~ .of.- ..... .
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It is probable that the golf course will take several years
to come close to its potential. Therefore, we have shown the
percentage of potential it will probably attain in the first
five years of operation.
Year One @70%........... .$344,585
Year Two @7 5%. . . . . . . . . II . 369,198
Year three @8~" . .. . . . . . . . 393,812
Year Four @85%. . . . . . . . . . . 418,425
Year Five .@90%. II- . oil . . . . . . . 4u),038
It is my feeling that these fi~~res might be so~ewhat conservative
and the golf course could do better at a more rapid rate. Much
will depend on the nature and quality of rr;anagenent ~~d the ability
of the city to operate without the_burden of discounting.
~hat the ci~y can make will depend on keeping expenses down. I
have projected some figures below that will probably be close
if the labor require~ents can be held in line with those suggested.
EXPENSES,
Payrolls
Superintendent
r.iechan.ic
6 Crel,li1nen
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t'ar1,';-L1.rne
starters (3)
l/'anager
Sec-3ookkeeper
$12,000
10,000
48,000
20,000
22,500
14,000
8,000
$134,500
$134,500
!\la""'G e ria 1 s... .. . . . .. , .. .. .. .. .. .. .. .. .. . . . .. .. . .. III .. .. .. .. .. . . . I
]0,000
5,000
25,000
6,000
20,175
10,000
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."""\.epalrs.. .. ... .. .. .. .. . .. . .. . . . . . .. .. . . .. . .. . . . .. . . .. II . . . .
utili tie s. . .. .. .. .. . .. .. .. .. ... .... oil . . .. .. . .. . . .. .. .. ,.. I .. . .
Taxes............................. + of. . ill............... lit..
P ayr 0 11 Ex p e 1: s e . . . . . . . . . . . . . . . . . . . . . . . . . . .
fi'liscellaJ1eous............................,..... ... .........
TOTAL PROJECTED EX?S~SES
$230,675
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"Sarlta r:onica
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If the golf course is operated efficiently and is allcwed to
- operate on a profit making basis, the amount of money available
annually (for five years) for investment recapture could look
like the following figures,
Year Income Expenses Available For Debt Servic~
1 $]44,585 $2Jo,675 $113,910
2 J69,198 242,208 126,990
3 393,812 254,318 139, ll94
4 418,425 267,OJ3 151,392
5 443,OJ8 280,J84 162,654
CONSTRUCTION COSTS
It is difficult to project constructinn costs at this time, but
there does not appear to be any major problems with the site once
the concrete and asphalt are removed. The best source is to
convey with Mr. Ted Ro~inson, the golf course architect who de-
signed the preliminary layout. He is one the workIs finest and
can corne close to an accurate figure~
In terms of what I am seeing around the ~est Coast, the average
l8-hole Executive golf course is running in a r~~ge of $600,000
to $800,000 for the actual course work, with clubhuuse, r~~ge
facility, and on site irr.pro~cments costing additional money. The
total facility can cost up to $1.4 million once all site work is
considered.
SAFETY ISSUES AND Qu~STIONS ON PRESENT L~YOuT
The only concern I would have on this subject is the routing
direction of the first nine holes. ~ost 0: these who play this
golf course will be novices or not highly s~illed golfers. Nost
will tend to slice a great deal (hit to the right). As the first
nine is now routed, the golfer will be Slicing into the airport
runway at the begi~~ing of the first nine and into the commercial
area as he returns toward the clubhouse. This could be taken care
of rather simply by reversing the direction of the nine holes. In
other words, ~ake the first hole begin where the ninth green is
situated~ There ~ay be reasons for not being able to do so, but
this change should be considered.